Bed Bath & Beyond defaults on loans, moving closer to bankruptcy

Bed Bath & Beyond defaulted on its loans and doesn’t have enough money to pay what it owes, the retailer said Thursday.

Home goods chain disclosed default on a stock exchange presentation which said it was considering alternatives, including restructuring its debt in bankruptcy court.

The filing is not the first time Bed Bath & Beyond has hinted at bankruptcy. The company warned earlier this month that there was “substantial doubt” could stay in business. The retailer recently reported a 33% drop in sales and a growing loss for its fiscal third quarter ending Nov. 26, compared to the same period a year earlier.

Chief executive Sue Gove blamed the underperformance on inventory constraints and reduced credit limits that resulted in a shortage of merchandise on store shelves. Wall Street analysts and consumer behavior experts told CBS MoneyWatch that Bed Bath & Beyond committed self-sabotage years ago by not moving to e-commerce fast enough, buying back too much of its own stock and trying to sell brand-name products. private that consumers do not like

The default notice “underscores that the company is living on both time and borrowed money,” Neil Saunders, managing director of GlobalData, said in a research note on Thursday. “Short of a miracle in the form of a sale of part of the business or a loan from an investor, the most likely outcome is bankruptcy.”

A spokesperson for Bed Bath & Beyond told CBS MoneyWatch that the company has “a team with proven experience helping businesses successfully navigate difficult situations and grow stronger.”

Still, changing Bed Bath & Beyond is expected to be difficult amid increasing competition from discount stores. Its problems arise when the economy is weakening and shoppers are tightening their pockets.

Bed Bath & Beyond experienced a wave of popularity among investors last year when Ryan Cohen, the billionaire founder of online pet food company Chewy, bought more than 7 million shares of the company. Hears sold those shares last August in a move that netted him $178 million and caused a huge sell-off even among stock investors. The company made headlines again in September when its former CFO died unexpectedly after jumping from a skyscraper in New York.

The New Jersey-based retailer has been trying to turn things around and cut costs after previous management’s strategies worsened the sales slump. The company announced in August would close about 150 of its stores and cut its workforce by 20%. It also lined up more than $500 million in new financing.

Bed Bath & Beyond’s share price fell 22% on Thursday to $2.52 per share.